Chicago startup Clearcover has raised $43 million to expand its auto insurance business in Illinois and other states, betting that its online platform is more efficient and its policies cheaper than the insurance behemoths.

The trick is in the technology Clearcover was built on, said Kyle Nakatsuji, co-founder and CEO. For instance, three-fifths of claims are handled digitally, which cuts costs, and most policies are sold online, reducing overhead, he said.

“There’s no single point of magic,” Nakatsuji said. “We just said, ‘Look, we’re going to use modern technology to build a company … the way you would if you were building a company in 2017 instead of 1907.’ ”

Large insurers like Bloomington-based State Farm and Northbrook-based Allstate — which acquired online insurer Esurance in 2011 — have worked to become more efficient through technology in recent years. In some cases, that has resulted in job cuts.

Allstate quietly laid off more than 500 employees in the first part of 2017 as it began to rely more on its QuickFoto Claim feature, which lets customers start the claims process by sending in photos of damage.

Other car insurance startups are also expanding. Columbus, Ohio-based Root Insurance raised $100 million last summer and secured a valuation of $1 billion. Root sells policies in more than 20 states, including Illinois.

Still, State Farm and Allstate together accounted for more than one-quarter of the private passenger auto insurance market in 2017, according to data collected by the National Association of Insurance Commissioners.

Founded in late 2016, Clearcover so far has only sold policies in California. It plans to launch in Illinois sometime this quarter.

The startup sells policies through its website and partners with other companies to reach customers when they might need to buy car insurance, Nakatsuji said. For example, users might see a Clearcover quote while they’re perusing car insurance quote site The Zebra or credit score site Credit Karma.

That tactic saves the startup advertising dollars, said Vic Pascucci III, managing partner at Chicago-based Lightbank, which has invested in Clearcover. It makes more sense than blitzing people with billboards or commercials when car insurance is not at all on their mind, Pascucci said.

“The reality is, people don’t think about (car insurance),” he said. “They don’t care. They have to have it. So why can’t payments be (easy)?”

This is Clearcover’s second round of funding, bringing its total amount of investments raised to $54.5 million. Atlanta-based Cox Enterprises, which owns Kelly Blue Book, led the round. Other investors include Lightbank, Chicago-based Hyde Park Angels and American Family Ventures, the venture capital arm of American Family Insurance, Nakatsuji’s former employer.

Clearcover plans to hire 50 people in the next year, including on its engineering, data science, insurance and customer advocate teams. If the hiring is executed as planned, it will double the number of employees currently working out of Clearcover’s Loop headquarters.

“We will have to look for a new office space relatively quickly,” Nakatsuji said.